Published On : Mon, Oct 1st, 2018

Bombay HC issues notice in petition challenging self-defeating, impractical provisions

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The Bench of Justices Bhushan Gavai and Rohit Deo of the Nagpur Bench issued notice to the Centre, the state governments, the Attorney General for India, and the Advocate General for Maharashtra in the petition filed by Advocates Rahul Kishnani and Jagdish Kukreja. Advocate Shyam Dewani appeared for the petitioners before the Court.

The petitioners have pointed out that certain provisions of the Commercial Courts Act have only served to defeat the intent underlying its introduction i.e. the expeditious disposal of commercial cases with a high pecuniary value. The following provisions of the Commercial Courts Act have been specifically challenged:

– Section 2 (c): It is noted that this definition clause practically covers and makes all the disputes as commercial disputes, contrary to the object of the Commercial Courts Act i.e. to ensure the fast disposal of high value commercial disputes to provide an assurance to domestic and foreign investors.

– Section 2 (i): This provision deals with the value of commercial disputes falling under the jurisdiction of Commercial Courts. An ordinance introduced in 2018 served to reduce the pecuniary limit of such cases from Rs 1 crore to Rs 3 lakh. In other words, a “commercial dispute” valued above Rs 3 lakh would now be transferred to the designated Commercial Court. The petitioners contend that this would also defeat the goal of expediting the disposal of high value commercial disputes.

– Section 10 (3) : The petitioners have also challenged the transfer of jurisdiction over applications or appeals arising out of domestic commercial arbitration (ordinarily before the Principal Civil Court in a District) to the Commercial Courts. Inter alia, it is argued that the Arbitration and Conciliation Act, 1996 is a special statute which ought to take precedence over the more general Commercial Courts Act.

– Section 13: Appeals from decisions of the commercial court would lie before the commercial appellate division of the High Court. Also considering the lower pecuniary limit of Rs 3 lakh, concern has been raised that this provision would only add to the issue of high case pendency.

– Section 21: The overriding effect that the Commercial Courts Act is meant to have has been challenged, given the various concerns raised as well as the manner in which the state has chosen to implement the Act. The central objection over and above these concerns is the decision to vest all commercial disputes to a single court in every district. To put things in perspective, the petitioners cite the example of the Nagpur district, where a 2016 notification vested the District Court with jurisdiction over all commercial disputes arising on the area. This move has overburdened the said court, states the petition.

“… the work which was distributed amongst as many as 18 Courts of Civil Judge, Senior Division and 55 Courts of Civil Judge, Junior Division are being transferred to one Single Court of District Judge, Nagpur-1, which is established as Commercial Court, who is already burdened with various other Session Trials and Appellate work as stated herein above.”

The petitioners have argued that that it would be impossible for a single District Court to handle all jurisdictional commercial disputes within the time-frame envisioned in the Act.

“…all the suits or any proceedings for that matter having slightest element of commercial dispute will have to be transferred to the Commercial Court…the Commercial Court, is bound to be flooded with transfer of various proceedings from practically all other Courts in the District and as a result of which, because of impossibility of a Judge appointed as Commercial Court, to deal with so many number of cases, within the time frame stipulated by the legislation. Thus, this is bound to result into defeating the purpose for which said Commercial Court Act was enacted.“

In the backdrop of these concerns, the petitioners have prayed that the High Court either strike down such self-defeating provisions, or direct that the law be re-worked to achieve the intended object of the 2015 Act. In the alternative, the petitioners have prayed that the Court frame guidelines and issue directions for the extension of commercial dispute jurisdiction to more courts.